Trillion-dollar doubloon

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This Business Insider article gives the clearest explanation of the economics in back of that trillion-dollar platinum coin that is proposed as a way to ignore the (probably unconstitutional) deficit ceiling. If you have any interest in "the deficit" or "the unsustainable national debt," it is worth reading in full (not overlong).

The author, Joe Wiesenthal, does a good job explaining what money really is. The minting of a trillion-dollar coin by Treasury would be---except for one insignificant detail---exactly the same action as "injecting money" into the supply through quantitative easing or "running the printing presses" by the Federal Reserve. The only difference is that the Fed doesn't first strike a denomination of currency to represent the money-supply expansion. Whether it has Treasury strike that trillion-dollar doubloon or not makes no economic difference other than the amount of metal and labor that go into the coin. That's it---it really is.


It's a separate question as to whether expanding the money supply at any given time is constructive or reckless. Both Democratic and Republican administrations do it as a matter of course. In fact, that's how the Bush administration paid for two unfunded wars! Regardless, as a matter of practice, minting the coin would be no different from any other monetary stimulus---the wisdom or foolishness of it arises from the policy objectives (or lack of them), nothing else. The only reason this policy lever is even being talked about, of course, is that a loophole in the commemorative coin law makes this a feasible way to avoid an illegal default on the national debt as threatened by kamikaze GOP congressmen.

An interesting detail is that the coin law was drafted by a former director of the US Mint (Clinton era), who provided key technical information for Wiesenthal's article. I'd bet anybody a tall beer that this gentleman knew exactly what he was doing when he helped to craft the language of the law, loophole and all.

Overheard

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...on a call-in show on my local university public radio station, on which two veterinary medicine doctors were guests:

"Many people don't have health insurance for their pets."

Laid to waste

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Happy New Year. I've been practically housebound since last Sunday with a malady resembling the flu, and it started a few days before that. Today is the first day I've been moving around without misery or discomfort.

A prolonged, disabling illness is rare for me. When I am afflicted, for some reason I spend most of my otherwise-idle brain cycles to perform self critique and consider my current location along the stream of life. This time has been no different, so my brain is stocked with all kinds of resolution fodder. What convenient timing.